The Fat Tail

(1/2)The critical thing here is what's not said: Interest payments are what's added to the debt, which begets more interest expense. With rates stable, payments increase linearly, but the ROC in debt is increasing (parabolic). If rates fall to 3%, interest expense just stops...

@HBMStrategies "Extreme backwardation tends to appear near supply panic and late-cycle commodity spikes..." 1) the market backwardated immediately - panic maybe, but late-cycle in what universe? 2) Not even '74 was this significant of a disruption with basically zero improvement in 2 months.

WTI backwardation reached -2 last month. Historically, that’s been a very bearish signal for oil prices. Since 1986, similar setups saw: • 3M avg return: -8.4% • 6M avg return: -17.4% • 12M avg return: -23.2% • 0% of cases were positive after 12 months. Extreme backwardation tends to appear near supply panic and late-cycle commodity spikes — not durable bottoms.

@jam_croissant I usually read emoji pretty well, but this one always confuses me... "S&P on princess divided by monkey" be like...????

$SPX on 👸/ 🦥 week be like…

@JulietteJDI Are you reaffirming the opinion that the war is essentially "over"?

The war is over ... now what? We laid it all out in last week's report. Reach out at business@jdiresearch.com

@SantiagoAuFund $hit on him all you want, the guy has made me more money than any 10 other knuckle heads.

Luke has been saying this trend would end since 2018. And during that time the global capital the US has sucked into its capital markets has...doubled.

@jam_croissant Not to a voter like me who knows what's coming.

@SantiagoAuFund @LawrenceLepard @Sorenthek The deficit requires the consent of our creditors, and they are slowly and steadily withdrawing it. "Deficits don't matter".... "as long as real interest expense to GDP isn't rising" is the important nuance.

@LawrenceLepard @Sorenthek Deficits have not mattered for either of our entire lifetimes. What changed and why is it different this time?

Sunday Book review

@ZeeContrarian1 I was just 27 in July '07 when I moved everything I had to cash. Subprime was discussed regularly in mainstream media and it was obvious to me the financial world was about to implode. We still made ATH into the fall and it was 6mo before the market reacted. Similar in Feb 2020.

𝗣𝗿𝗶𝗰𝗲𝗱 𝗜𝗻 Yesterday I wrote: markets at all-time highs, $VIX below 20, oil below 90. That tells you everything you need to know. Despite what some doomsayers say, the rally itself is the message. When I said “priced in,” a lot of people pushed back, pointing to the Global Financial Crisis. They said: “That wasn’t priced in, so you’re obviously wrong.” But that misses the point. There’s a reason there’s a movie like The Big Short. It shows exactly what happened. Only a small group of people truly understood the risks in the mortgage market. The knowledge wasn’t widespread. Capital didn’t move until it did. And once understanding spread, everything repriced violently and fast. That’s the key difference. Back then, very few people knew. Today, everyone “knows.” Scroll through X and you’ll see the same narratives repeated endlessly. Crude oil risk. Widening credit spreads. Software valuations. Private equity stress.. you name it…. If every average person is talking about it, it’s not hidden information. It may not be 100% priced in, but it’s probably 90% there. Markets don’t wait for certainty. They move on awareness. And when something becomes common conversation, it’s no longer an edge. That’s why there’s no real value in what you read or debate on X about these topics. It’s already in the price.

@Norseman1 @raymondching You are not a clear communicator, sorry. You forget that most people who follow you don't see all or even most of your posts. If you want to avoid confusion, with every post you need to assume the viewers aren't in your head and haven't seen most of your stuff.

@raymondching How do you get that from this post? It’s literally the opposite…

The market is as complicated as you make it. This structure has never existed in modern market history yet huge accounts on this platform are selling it to you right and left and you are lapping it up. This is how the market works. Selling you Unicorns that 💩Skittles.

@birdscolour56 I hate AI

I can't handle this level of cuteness...

@hoomansv @LayahHeilpern B-Waves can you dimwit. Oct '07 & Feb '20 are prime examples. If it is in-fact a B-wave (big if), the following C-Wave tends to be violent. Hence '08-'09, Feb-Mar 2020.

@LayahHeilpern Bear market rallies don’t make new all time highs you dimwit

Bear market rallies exist to make you feel stupid for being cautious. Then a week later you're glad you didn't buy the top. We've been here before. Control your emotions. Do not FOMO in.

@Vasi79033 @Scaramucci "rules for war" are political, not military.

@Scaramucci Not true - This will reshape history books and military rules of war doctrines for futures to come

Actual quotes from President Trump: Trump’s “victory timeline” claims. Mar 3: "We won the war." Mar 7: "We defeated Iran." Mar 9: "We must attack Iran." Mar 9: "The war is ending almost completely, and very beautifully. March 10: practically nothing left to target Mar 11: “You never like to say too ⁠early you won. We won. In ​the first hour it was over.” Mar 12: "We did win, but we haven't won completely yet." Mar 13: "We won the war." Mar 14: "Please help us." Mar 15: "If you don't help us, I will certainly remember it." Mar 16: "Actually, we don't need any help at all." Mar 16: "I was just testing to see who's listening to me." Mar 16: "If NATO doesn't help, they will suffer something very bad." Mar 17: "We neither need nor want NATO's help." Mar 17: "I don't need Congressional approval to withdraw from NATO." Mar 18: "Our allies must cooperate in reopening the Strait of Hormuz." Mar 19: "US allies need to get a grip - step up and help open the Strait of Hormuz." Mar 20: "NATO are cowards." Mar 21: "The Strait of Hormuz must be protected by the countries that use it. We don't use it, we don't need to open it." Mar 22: "This is the last time. I will give Iran 48 hours. Open the strait" Mar 22: "Iran is Dead" Mar 23: "We had very good and productive talks with Iran." Mar 24: "We’re making progress." Mar 25: “They gave us a present and the present arrived today. And it was a very big present worth a tremendous amount of money. I’m not going to tell you what that present is, but it was a very significant prize.” Mar 26: "Make a deal, or we’ll just keep blowing them away." Mar 27: "We don’t have to be there for NATO." Mar 28: No major quote Mar 29: Claimed talks were progressing Mar 30: "Open the Strait of Hormuz immediately, or face devastating consequences." Mar 31: Claimed a deal was "very close" and that Iran would "do the right thing" Apr 1: "We’ll see what happens very soon." Apr 2: Repeated that a deal was likely, while warning of continued strikes if not Apr 3: "Something big is going to happen." Apr 4: Said Iran must comply "immediately" or face further consequences. Apr 5: "Open the fuckin' Strait, you crazy bastards, or you'll be living in Hell - JUST WATCH! Praise be to Allah." April 6 :a whole civilization will die April 7: total and complete victory April8: objectives were met A true disaster

@TommyThornton OMG. The survey suggests Trump follow-through is nowhere near priced in. We now have more forces in the middle east than we did in Iraq 1 or 2. Almost everything we have. I pray I'm wrong, but I wouldn't bet against him doing exactly what he is saying he's going to do.

Will today be just another Tuesday, or will it be ONE OF THE MOST IMPORTANT MOMENTS IN HISTORY TONIGHT with A WHOLE CIVILIZATION WILL DIE?

@PeteHegseth I've heard that somewhere before.... Did anyone tell the President how Rolling Thunder worked out?

Back to the Stone Age.

@scottmelker There are two things everyone forgets wrt BTC and quantum: 1) if you can attack the network with quantum, you can also secure it with quantum. 2) the day you hack the BTC network is well-after you've already hacked every other financial network on the the plantet.

Google research put out a reasonable report on the theoretical quantum threat to Bitcoin. You have to at least accept that there’s a small chance they are right. Instead, most bitcoiners are acting like Google punched their mom in the boob.

@Mike_Taylor1972 The only upside left in oil is if this gets worse. That's dependent on human decisions from particularly unpredictable people - not risks I take. The notion that Iran hasn't = can't inflict much longer lasting infrastructure damage is... not the best assumption you've made.

@Tail__Risk so are you getting longer oil for next week?

Iran: here is the thing - everyone worried about escalation. Iran lists targets: "the region will go dark" If Iran could have hit those targets, IMHO they already would have. - no supply lines - little coms - US has air superiority IMHO - this is over by Monday.

@Turgidism @jam_croissant 1) Xi says he will reunify Taiwan by 2027 2) US has 2 CSGs tied up in Iran. 3) US spent the last year emptying it's magazines that 4) can't be rebuild without Chinese material. Not saying Trump would have intervened anyway, but now he can't even pretend. Patients + Opportunity

1) Who do you think The US’s 🇺🇸 war in Iran 🇮🇷 is actually against??? 2) Given that… What do you see as the US’s 🇺🇸 #1 & #2 greatest sources of leverage in this Grand War ⚔️??? 3) Are those 2 sources of leverage somehow connected 🪢 to 1 another??? 4) Given that, why might the Strait of Hormuz 🚢 be the most critical front of this Grand War⚔️??? 5) Finally… Why might that mean that this conflict likely won’t (actually) be "very complete, pretty much," for many years??? 🤷‍♂️ #🥐RUMBS. . . . . . . . . . .

@michaeljmcnair This is an interesting take @LukeGromen

Gold and silver are not acting well in a period of rapidly rising geopolitical risks. We have an Iran War, Strait of Hormuz blockade, rising volatility. In the old framework, that setup should be close to ideal for gold. But once you understand what is now driving gold, this move makes perfect sense. Something fundamental changed after the US and Europe froze Russian reserves in 2022. For decades, surplus countries parked their excess savings in US dollar assets, mostly Treasuries. The freezing of Russian reserves combined with the current administration's explicit push to discourage foreign countries from parking excess savings in US financial assets, forced surplus countries to rethink where they store reserves. And those countries haven't changed their domestic policies that generate the excess savings, so those savings have to be placed somewhere. The result is that gold and silver have increasingly become the obvious “neutral” reserve assets. That’s why gold decoupled from the three factors that used to explain it…real interest rates, volatility, and liquidity. Now reserve accumulation flows have become the primary driver. That shift has a consequence I don’t think most investors have thought through. If gold is now primarily driven by reserve flows from surplus countries, then gold has become pro-cyclical. Reserve growth is driven by export revenues, trade surpluses, economic growth in surplus economies. When the global economy is strong and surplus countries are generating large export revenues, their excess savings grow, their reserve accumulation accelerates, and gold catches a bid. When that surplus generation is disrupted, the bid weakens or reverses. This is exactly what is happening with the blockade of the Strait of Hormuz. The GCC countries are major reserve/gold buyers and now their export revenues are collapsing. They likely need to liquidate some reserves to cover fiscal obligations, and gold is one of their most liquid assets. Even if the reserve sales aren’t excessive yet, the market can see their reserve accumulation has stalled and probably reversed. That flow, which was a meaningful source of gold demand, has gone to zero at best. There are also secondary effects on other surplus economies. China is the world's largest oil importer. An energy shock of this magnitude slows Chinese growth, and compresses Chinese surpluses, which slows Chinese reserve accumulation. That same growth shock ripples through Korea, Taiwan, Japan, and the rest of Asia. The whole chain that has been driving gold higher, surplus countries generating excess savings that need a home outside the dollar system, is being disrupted by an event that in the old model would have been unambiguously bullish for gold. This doesn't mean the structural case for gold is broken. The dollar standard is still ending. Surplus countries still need an alternative to Treasuries and gold is still the most obvious destination. But it does mean gold is going to be more volatile along that structural trend than most people expect, and the volatility will correlate with global growth and surplus generation rather than with the old drivers. Gold rallies when surpluses expand. Gold sells off when surpluses contract. Even if the reason for the contraction is rising geopolitical risk that, under the old model, should have sent gold to the moon.

@HorifyingPeople Fine for rough estimation close to room temp, but the top two are wrong. Should be 38C and 27C.

Because nobody had told me 😡

@Crazymoments01 Fake. Since when do penguins walk on water?

The cutest thieves ever!!!!🤣 This is so adorable. I love them thanks for your kindness. God bless you.